Project Overview

A high-end hospitality project located in the Cyclades Islands required cost optimization during the tender phase without compromising the quality and guest experience expected from such a prestigious development. The project involved a luxury boutique hotel with villas, common areas, and extensive outdoor landscaping, with an initial estimated cost exceeding the client’s budget by 15%.

 

Challenge

The key challenge was to bring the project’s cost in line with the client’s financial constraints while maintaining the design intent and ensuring the high standards of construction synonymous with Cycladic architecture and luxury hospitality.

 

Our Approach

At QS Plan, we employed a structured Value Engineering (VE) methodology to identify opportunities for cost optimization. The VE process was conducted in close collaboration with the design team, the client, and potential contractors, focusing on alternative solutions that offered the same or improved functionality at a reduced cost.

 

Value Engineering Methodology

1. Cost Breakdown and Analysis

• Conducted a thorough analysis of the initial BOQ and cost estimates.

• Identified cost-heavy elements such as finishes, structural systems, MEP installations, and landscaping.

• Prioritized elements with the highest potential for cost savings.

2. Alternative Solutions and Materials

• Structural Systems: Proposed using locally sourced stone and modular concrete systems to reduce transportation and material costs.

• Finishes: Recommended alternative finishes such as engineered stone instead of marble and high-quality composite wood for external decking, which maintained aesthetics but reduced costs.

• MEP Systems: Reviewed energy-efficient HVAC systems with lower upfront installation costs while still meeting performance requirements.

3. Supplier and Contractor Engagement

• Engaged local suppliers and contractors to provide input on material costs, availability, and lead times.

• Secured competitive pricing by leveraging local resources and negotiating bulk discounts.

4. Collaborative Workshops

• Organized workshops with the design team and client to evaluate the practicality and aesthetic impact of proposed changes.

• Ensured all stakeholders aligned on changes to the scope and design intent.

5. Quantitative Impact Assessment

• Calculated cost savings for each proposed VE solution, considering lifecycle costs and impact on project schedule.

• Prioritized VE recommendations that offered the highest savings with minimal impact on functionality or aesthetics.

 

Results

Through this structured VE process, we successfully reduced the project cost by 12%, bringing it within the client’s budget. Specific achievements included:

• Structural Systems: 20% cost savings by using modular concrete and locally sourced stone.

• Finishes: 15% cost reduction by substituting premium materials with cost-effective alternatives that maintained quality.

• Landscaping: Streamlined designs to reduce material and labor costs without compromising the Cycladic aesthetic

The Challenge

Our client was preparing to move forward with a hospitality project in a Cycladic island, relying on a detailed Bill of Quantities (BOQ) as the foundation for their tendering and budgeting process. However, during a routine review of the BOQ, we identified inconsistencies and omissions in the scope of work. The missing scope, if left unaddressed, could lead to unpriced items, contractor claims, and significant cost overruns during the construction phase.

Our Approach

1. Comprehensive BOQ Review:

We conducted a line-by-line audit of the tender BOQ against the design documents. This review uncovered missing scope items worth €350,000, including critical work components that were overlooked in the initial BOQ preparation.

2. Collaboration with the Design Team:

After identifying the gaps, we collaborated closely with the design team to ensure that the missing scope was fully integrated into the revised BOQ. This ensured alignment between the design intent and the pricing structure.

3. Value Engineering Process:

To mitigate the budget impact of the newly added scope, we initiated a value engineering process. This involved:

• Reassessing materials, methods, and specifications to identify cost-saving alternatives.

• Prioritizing essential elements to maintain the project’s functional and aesthetic goals.

• Engaging the client and key stakeholders to ensure that proposed changes were acceptable and aligned with the project’s vision.

The Outcome

The revised BOQ not only reflected the full scope of the project but also accounted for the previously unpriced €350,000. Through the value engineering process, we achieved cost reductions that brought the total budget back in line with the original target, ensuring no additional financial burden on the client.

Lessons Learned

This case highlights the importance of diligent BOQ reviews and strategic value engineering in pre-construction phases. By addressing gaps early, we prevented future claims and ensured the project’s financial stability.